29 February 2012

Going Dutch: An insider's view of the 'happiest' country in the world

Going Dutch: An insider's view of the 'happiest' country in the world
Tuesday, February 28, 2012

When I'm in Utrecht, a city founded by the Romans, I stay in a house that was built in 1412 on a street that's about as wide as an open umbrella. Like many Dutch, I walk or travel by bicycle, parking it with thousands of others at the train station, where a quick commute will take me to Amsterdam in less than a half-hour. Utrecht is centrally located -- a gem of a city whose canals are lined with little shops, bookstores and countless outdoor cafes. Actually, this describes most Dutch cities; Utrecht's main claims to fame are its cathedral (with the Netherlands' tallest tower), its many hidden medieval gardens or "hofs," its wonderful early-music scene, quirky public art (a flying saucer atop the train headquarters!) and, of course, its history (the Treaty of Utrecht).
The city is a curious mix of old and new, with buildings and vistas unchanged for hundreds of years, and with bleeding-edge software design companies (Utrecht is the computer game capital of the country), high fashion and futuristic stereo equipment. I'm sure that the air has calories, filled as it is with the aroma of butter-rich bakeries, the world's best fries sold by outdoor vendors, deep-roasted coffee and the cuisine of countless cultures. And yet somehow, the Dutch remain lean and tall (at an average height of 6 foot 1, they are the world's tallest people), taking it all in stride. It's one of the most relaxed and well-balanced cultures that I've experienced.
For Fox's Bill O'Reilly, however, the Netherlands represents everything that is wrong with Europe. Tolerance, an open society, a more expansive range of personal freedoms than those enjoyed in the U.S. -- these factors, say Mr. O'Reilly and his co-hosts, have led Amsterdam to become a cesspool of corruption, crime and anarchy. The Dutch, after all, allow soft drugs, prostitution (Amsterdam's red light district is a major tourist attraction) and euthanasia. Worse, it's all coming here to America!
Dutch citizens posted widely circulated rebuttals on YouTube, arguing through statistics: Americans are twice as likely as Dutch to have tried marijuana; the U.S. murder rate is almost five times higher; and Americans are 16 times more likely to suffer drug-related deaths than their Dutch counterparts. The Dutch strategy seems to be that openness and regulation work well together. Drugs and prostitution, they say, are better regulated than exploited by criminals. One might add that in 2011 the Organization for Economic Co-operation and Development ranked the Netherlands the "happiest" country.
While the Netherlands is known for its free and easygoing lifestyle, it emerges paradoxically from a deep tradition of regulation and collaboration. With close to 25 percent of its land and 21 percent of its population below sea level, the Dutch learned long ago how to regulate water. The canals, waterways and polders that keep the country habitable not only attest to engineering prowess, but also to a highly evolved system of coordination and control. The Begijnhof, a medieval enclave of tiny houses hidden in the busy center of Amsterdam, is a reminder of long-standing Dutch commitment to collaborative ventures. Often religious in origin, these clusters of still-surviving medieval row houses attest to the community's support for the elderly, the infirm, orphans and widows, anticipating social policies that have been maintained into the present. Unlike the current American debate that pits social responsibility against capital development, the Dutch saw the advantage of joining both together. Using pooled labor and capital, the Dutch people expanded their landmass. Using pooled assets, the rising middle class bought stock in the Dutch East India Co., enabling them to share this first multinational corporation's profits in global colonization and trade since 1602.
Today, Dutch-owned companies such as Sara Lee, Nielsen Media Research (the TV ratings folks), Unilever, ING Bank, Philips and Shell carry on that tradition. Together with the Dutch tax shelters used by holding companies for U2 and the Rolling Stones, Prada, Nike and record label EMI, the message is that the Netherlands is great for business. Social responsibility and profits are not incompatible. Maybe that's part of why the Dutch are so happy.
The European socialism so feared by the American Right has resulted in a nation with a first-rate infrastructure, whether in terms of public transportation, health and education, or industry. The Netherlands contains some of Europe's top universities, yet tuition is next to nothing ($2,250 per year). Its medical care is among the world's best, using a system that combines reasonably priced commercial insurance with state regulation. Investments in the arts and quality of life abound. It's not only home to the Van Gogh Museum, the Frans Hals Museum and Rembrandt's house, but also the Russians opened a branch of the Hermitage there. While experiencing recent recession-related cutbacks, the Netherlands has managed to maintain an extraordinarily rich cultural life. (And a point of pride: Its athletes, especially in speed skating, soccer and women's field hockey, regularly top the world.)
Somehow, the Dutch have managed to reconcile the irreconcilable. A tiny country with few natural resources, they have built a sprawling global empire. (They are the third-largest investors in the United States.) An emphatically modern culture, with state-of-the-art architecture and infrastructure, they have managed to keep their historical cities intact, complete with weekly outdoor flower, cheese and fish markets. A refreshingly liberal land, it tolerates soft drug use in its "coffee shops" (if it's coffee you're after, go to a cafe) and even provides free heroin to hardened addicts. Despite, or perhaps because of this, it has a dramatically smaller percentage of drug users and drug-related problems than countries like our own. Not bad for a place usually associated with wooden shoes, windmills, tulips and cheese.
The Dutch were, of course, early settlers in the U.S. (and in one of their poorer deals, traded Manhattan to the British for Surinam!). Thanks to their American Colonies (and the Glorious Revolution in which the Dutch invaded England and left a lasting cultural impression), they left behind a legacy that we can still see in our architecture, gardens and city names (Brooklyn, Harlem, Hoboken).
Today, the Dutch influence lives on, as much through Dutch multinationals as through television ("Big Brother!" "Fear Factor!" "Extreme Makeover!"), design (Droog), music (from gabber to DJ Armin van Buuren), beer (Heineken, Grolsch) and architecture (Rem Koolhaas).
A trip to the Netherlands reveals a very different culture, and one that doesn't get exported much. Besides the art, music and architecture, old Dutch cheeses, Dutch pancakes (thin, pan-sized and with the bacon cooked right in) and some of the world's best junk foods make the place very comfortable ... and distinctive.
Civility is deeply ingrained in the Dutch spirit, and the Netherlands remains overwhelmingly (and comfortably) middle class; a place where the police and the tax collector give second chances; and a place where personal freedom and social responsibility are seen as two sides of the same coin. I hope that Bill O'Reilly's dire prediction comes true -- we could use a little bit of this civility in the good old USA.

William Uricchio is director of Comparative Media Studies at MIT and professor of Comparative Media History at Utrecht University in the Netherlands. He also heads the Singapore-MIT GAMBIT Game Lab in Singapore. He also is the brother of PG SEEN Editor Marylynn Uricchio.

First published on February 28, 2012 at 12:00 am

Read more: http://www.post-gazette.com/pg/12059/1213032-51-0.stm#ixzz1nmgxFwzw

Emerald Emerging Markets Case Studies

Banner: Emerging Markets Case Studies.

Emerald is delighted to announce the launch of the International Case Writing Competiton.

Emerald Emerging Markets Case Studies collection is awarding $1,000 (US) to the author/s of the best teaching case submitted as part of this international competition.
If you have business and management cases with a focus on emerging economies, that you have tried and tested in class, why not enter them into this competition?

The prize

  • Cash prize of $1,000 (US)
  • Selected cases will be published in the Emerald Emerging Markets Case Studies and will enjoy international dissemination and wide readership and usage.
  • Share your case with other educators around the globe. If your case is selected for publication, it will be read and used by your peers in universities around the world. Your case will enrich the teaching and learning experience of educators and students internationally.

How to apply

Submissions are to be made via ScholarOne to the ‘International Competition Issue’. Authors are invited to follow these guidelines and are required to submit their case study, teaching notes and consent to publish form to the ‘International Competition Issue’.
Submissions which are not flagged up as being part of the International Competition Issue will not be eligible for the prize.
Relevant submissions will enter into the review process and authors will receive feedback about their work.
Selected cases will be published in the Emerald Emerging Markets Case Studies and will enjoy international dissemination and wide readership and usage.

NNO speelt Armin van Buuren

28 February 2012

Students World Dialogue @ Daimler - 2011 short version

Helmets make cycling less safe, says Dutch cycling union

Helmets make cycling less safe, says Dutch cycling union

Tuesday 28 February 2012

Helmets give cyclists a false sense of security and making helmets compulsory will lead to fewer people using their bikes, according to the Dutch cyclists' union in the latest edition of its magazine.
Cycling helmets can protect heads against severe brain injury if the bike is stationary, but at speeds of over 20 kph - easily reached when falling from a slow-moving bike - the helmet offers little protection, Theo Zeegers says in the article.
'It is notable that the number of mountain bikers and racing cyclists who end up in hospital with or without a helmet is almost the same,' Zeegers said. 'Helmets offer a false sense of security. Helmets offer no protection if you crash into a car and often don't help when no other vehicle is involved because they are not properly fitted.'
Rather than introducing the compulsory wearing of helmets, Dutch local councils should improve cycling lessons at schools and improve the provision of cycling lanes, the cyclists' union says.
Zeegers points to research by the Dutch traffic safety council which shows 60% of people would cycle less if helmets are made compulsory. And, he says, the public health institute RIVM calculates the cost to society of that would be much greater than the benefits brought by cycle helmets.

© DutchNews.nl

25 February 2012

Dutch TV presenters eat each other's flesh

10 reasons to visit Portugal

23 February 2012

Movie about the Netherlands

Is this really a news topic?

Seems not all understand what is going on in the world.
DutchNews.nl - Who gets paid to work on February 29?

Who gets paid to work on February 29?

Thursday 23 February 2012

Many people are not aware they are working one day for no pay this year – because 2012 is a leap year, according to research by staffing agency Uitzendspecialist.

Almost 50% of workers do not realise February 29 is a ‘free day’ for employers.

However, the agency says 17% of employers are planning to pay staff extra. And, it points out, freelancers and people working through staffing agencies will also be paid because they are paid an hourly or daily rate.

MEET MR HOLLAND: Destination marketing, Dutch style -

MEET MR HOLLAND: Destination marketing, Dutch style -

MEET MR HOLLAND: Destination marketing, Dutch style

15/02/2012 by James Latham
Email this to a colleague:

Renowned for the innovative techniques they comes up with to market their destination,

the Dutch have come up with another first.

orget new technology or social media and meet

Holland personified –

James Latham did just that at last year’s EIBTM…

19 February 2012

DutchNews.nl - Allround speed skating titles for Sven Kramer and Ireen Wüst

DutchNews.nl - Allround speed skating titles for Sven Kramer and Ireen Wüst

Allround speed skating titles for Sven Kramer and Ireen Wüst

Sunday 19 February 2012

kramerA winning team: Blokhuijsen, Kramer and Verweij

Sven Kramer took his fifth world allround speed skating title in Moscow on Sunday, making him the most successful Dutch speed skater ever.

Jan Blokhuijsen took silver and Koen Verweij bronze, so it was all Oranje podium in the men's event.

Kramer, who was out injured all last season, has now eclipsed Kramer Rintje Ritsma, who took four world titles.


Ireen Wüst in action

In the women's event, Ireen Wüst retained her world title, holding of main rival Martina Sábliková. Wüst also took the title in 2007.

The men's competition involves races of 500m, 1,500m, 5km and 10km, the women's 500m, 1,500m, 3km and 5km.

Photos: Reuters

16 February 2012

Why You Shouldn’t Have More

Why You Shouldn’t Have More Than 354 Facebook FriendsPublished 

Facebook used to be a source of amusement and happiness—why else would 483 million people check in daily? But if you find your news feed to be more of a bummer with each passing day, you’re not alone.
In a study presented at the recent Society for Personality and Social Psychology meeting, researchers asked a sample group of Facebook users between the ages of 18 and 65 to read some of their friends’ status updates. Afterward, those Facebook users rated their lives as much less satisfying than people who didn’t check their news feed first.
More from MensHealth.com: The Big Facebook Lie You Tell Yourself
Among the group who read updates, the study revealed that having 354 Facebook friends seemed to be the tipping point after which people were increasingly less happy with their lives.

The reason: Much of how we judge our success in life is based on how we stack up against our peers. “The problem is that Facebook gives us a limited view of our friends’ lives, and that view tends to be unrealistically positive,” says study author Dilney Goncalves, Ph.D., a marketing professor at IE Business School in Madrid. The more friends you have, he adds, the more likely you are to spend your day enviously reading about someone’s paradise vacation, new girlfriend, or job promotion. (Do you update your statuses at least twice a day? Then you might be a narcissist.)
Goncalves recommends unsubscribing from your most prolific braggarts and fine-tuning your news feed. You can choose to read all updates from a friend, downgrade to a smaller portion of their updates, or view only what Mark Zuckerberg’s voodoo determines to be their “most important” posts.
Another option: Cut ties with excess acquaintances to reduce your stream to best buds only. That means your dentist, your freshman year hall-mate, and your overbearing ex can all get the axe. (ReadHow Facebook Has Changed Sex.) When you’ve reached a comfortable count, “learning about the success of your closest friends can actually make you happier,” Goncalves says.
More from MensHealth.com: What Your Facebook Friends Say About You

15 February 2012

How to make a video spot to promote one country

Portugal’s Debt Efforts May Be Warning for Greece

Portugal’s Debt Efforts May Be Warning for Greece

LISBON — As debt-plagued Greece struggles to meet Europe’s strict terms for receiving its next round of bailout money, the lesson of Portugal might bear watching.
Unlike Greece, Portugal is a debtor nation that has done everything that the European Union and the International Monetary Fund have asked it to, in exchange for the 78 billion euro (about $103 billion) bailout Lisbon received last May.
And yet, by the broadest measure of a country’s ability to repay its debts, Portugal is going deeper into the hole.
The ratio of Portugal’s debt to its overall economy, or gross domestic product, was 107 percent when it received the bailout. But the ratio has grown since then, and by next year is expected to reach 118 percent.
That’s not necessarily because Portugal’s overall debt is growing, but because its economy is shrinking. And economists say the same vicious circle could be taking hold elsewhere in Europe.
Two other closely watched countries on the debt list, Spain and Italy, also have rising debt-to-G.D.P. ratios — even though they, like Portugal, have adopted the budget-slashing and tax-raising measures that the European officials and the I.M.F. continue to prescribe.
And on Tuesday, new figures showed that the Greek economy shrank even more than expected last year, as Greece struggles under ever heavier austerity demands by its European lenders.
Without growth, reducing debt levels becomes nearly impossible. It is akin to trying to pay down a large credit card balance after taking a pay cut. You can slash expenses, but with lower earnings it is hard to set aside money to pay off debt.
Vitor Gaspar, the Portuguese finance minister who came to power as part of a new government last summer, is highly regarded by European economic and finance officials. He has reduced the government’s budget deficit by more than one-third so far, through tough measures that include cuts in spending and wages, pension rollbacks and tax increases.
But many economists say those moves are also a reason Portugal’s economy shrank by 1.5 percent in 2011 and is expected to contract by 3 percent this year.
“Portugal’s debt is just not sustainable,” said David Bencek, an analyst at the Kiel Institute for the World Economy, a research organization in Germany. “The real economy does not have the structure to grow in the future and thus will not be able to pay back its debt in the long run.”
The Portuguese public has so far has generally gone along with the government’s policies without the violent demonstrations that have rocked Greece, but it is starting to lose patience.
On Saturday, more than 100,000 people assembled peacefully in Lisbon’s sprawling Palace Square to rally against the austerity measures and the nation’s 13 percent unemployment, while chanting “I.M.F. doesn’t call the shots here!” The head of Portugal’s largest labor union vowed to hold additional protest rallies around the country.
The I.M.F., for its part, predicts that Portugal will eventually grow enough to cut its debt to a manageable level. But even the I.M.F. warns in its recent economic review that  if growth were to disappoint, Portugal’s debt “would not be sustainable.”
The finance minister, Mr. Gaspar, an economist who is a former research director at the European Central Bank and a disciple of the bank’s austerity-focused philosophy, insists that his country’s debt is manageable. And he has no plans to ease up. This year he intends to slash government pension payments by 1.2 billion euros (close to $1.6 billion) and cut the bonus payouts that public sector workers in this country have long earned.
In discussing his record, Mr. Gaspar prefers to focus on the effect his efforts have had on Portugal’s budget deficit — the difference between what it spends and what it takes in — which has fallen to 5.6 percent last year, from 9.1 percent in 2010. For this year, Mr. Gaspar forecasts a decline to 4.5 percent.
“We have delivered, and our adjustment program stands out in the euro area,” he said during an interview on Friday in the ornate surroundings of the finance ministry here.
Once Portugal’s budget reforms take hold, Mr. Gaspar predicts, the country’s economy will grow by more than 2 percent from 2014 on, and the debt will fall accordingly.
Mr. Gaspar has won plaudits from Europe’s leadership and the I.M.F., which are eager to champion an exemplar of economic revamping in contrast to Greece’s unspooling disaster. In fact, Portugal is deemed such a model of reform that the Europe Union and I.M.F. are widely expected to come up with more money for Portugal next year if necessary — as was suggested in an overheard exchange between Mr. Gaspar and the German finance minister at a meeting last week in Brussels.
But as Portugal’s slowly rising debt-to-G.D.P. ratio indicates, being Europe’s model debt patient does not necessarily make it easier to get out of debt. Others might find it even tougher.
Spain, whose debt-to-G.D.P. ratio was 36 percent before the debt crisis began, is projected to be more than double that — 84 percent — by 2013. Italy, whose ratio was already at 105 percent in 2009, is expected to reach 126 percent by next year.
Greece’s number is even worse — nearly 160 percent by the most recent measure. And that calculation was made last week by Europe’s official Eurostat research organization, before the Greek government on Tuesday released its latest economic figures showing that its economy shrank by 7 percent in the fourth quarter and by 6.8 percent for all of 2011 — even worse than the full-year contraction of 6 percent Athens had expected. Even if Greece receives all the bailout money it has been promised — a sum sure to exceed 200 billion euros — its debt-to-G.D.P. ratio is still expected to be onerous, 120 percent, in the year 2020. That grim outlook even factors in the big write-down of its debt that Greece is now trying to negotiate with its private creditors and the European Central Bank.
If Portugal and other European debtors find it increasingly difficult to pay off their creditors because of slow or no growth, some experts predict they, too, might eventually need to negotiate debt write-downs. That was how things played out in Latin America in the 1980s, once it became clear that the I.M.F.’s relentless austerity push was impeding the growth that countries needed to pay down debt.
Charles Wyplosz, an international economist, argues that until economic activity resumes in debt-burdened countries like Greece, Portugal and Italy, it is pointless to punish citizens with growth-sapping policies.
“It’s all pseudo-science,” he said. “That is why I think Portugal will have to default on its debt, and you can argue that Italy will have to restructure as well.”
Mr. Gaspar, though, contends that once his country’s reforms take hold, “we will put our debt-to-G.D.P. ratio on a sustainable path again.” And he is adamant that Portugal will not try to renegotiate its debt obligations, because of the permanent damage it might do to Lisbon’s reputation as a borrower.
“That possibility is completely excluded,” he said, adding that George Washington believed one of a country’s most precious assets was its ability to borrow in the bond market.
Economists accept that during the initial stage of a major spending adjustment program, the debt-to-G.D.P. ratio will spike as economic growth suffers. The bet, however, is that over time the economy will pick up enough that the country starts to generate a primary surplus — that is, a budget in the black, once debt payments are excluded.
But there are many who believe that just as Greece’s debt picture is fundamentally untenable, so is Portugal’s.
According to the calculation of Mr. Bencek, the economist, Portugal would need to produce a primary surplus of about 10 percent of G.D.P. in the coming years to reduce its debt ratio to a permanently serviceable level. That, he said, would require a degree of cuts in spending far beyond what Mr. Gaspar and his team have already been able to achieve.
As even the current cuts bite ever deeper, many Portuguese are asking if it might not be better for their government to try to negotiate easier terms with its lenders.  
“Portugal would save 3 billion euros a year if it restructured its debt,” said Pedro Lains, an economic historian and a blogger at the University of Lisbon.
Mr. Lains spoke not only as a theorist. He feels austerity firsthand. Because his salary at the government-run university has been slashed by 30 percent in the last year, his family has needed to dip into its savings.
He said that wage contraction throughout the country was prompting increasing numbers of Portuguese to leave the country, even as their government labors to prove it is worthy to remain part of the euro zone.
Why, Mr. Lains asks, should he and his fellow citizens suffer while the bondholders get their money back?  “It’s not the fault of the Portuguese people,” he said. “The fault lies with the structure of the euro.” 

Strengths and weaknesses of the SWOT tool for place-related analysis

Strengths and weaknesses of the SWOT tool for place-related analysis

by Ares Kalandides - http://blog.inpolis.com/
SWOT analysis according to wikipedia
by Ares Kalandides
I am sure most of us have already used some kind or other of a SWOT model to analyse something. In my business it is often used as an analytical tool to understand “places”, where they stand and what should be developed, but also to foresee possible changes.  The people who pay us to do the job love SWOTs: they are clear, schematic, straightforward, unambiguous. But social reality is rarely any of the above. I would like to share with you my thoughts, after having used SWOT analysis for many years, and I would love to hear yours.
SWOT as an instrument was developed in a business environment. It is used to identify factors (favourable/unfavourable and internal/external) that influence the success in reaching an objective. I have used SWOT in my own (small) business and I must say it has worked rather well. Yet, I have found it increasingly difficult to use it in a similar way to analyse places.
First of all, places are not really businesses, though I admit that it can sometimes make sense to look at them that way. Nonetheless, in order to do that we need to simplify, reduce and abstract. This may be helpful in looking at single factors, but we risk missing the forest for the trees. Places are not simply the sum of the elements that constitute them.
With most social phenomena, it is hard to find straightforward causal relations, e.g. A is the cause of B, not only because A doesn’t come alone, but also because there is often a reverse process taking place (where B causes A after A has influenced B), that makes that relation circular. Talented people leave a place because there are no jobs and no jobs are created because there are no talented people to do them (the typical case of brain-drain). Does it mean that if I manage to get more talented people around, then more businesses will follow? Hardly. So is it the chicken or the egg? The more complex the question, the more complicated the answer.
Yet, in order to create a SWOT analysis I need this type of causal relation. The “OT” part is about hypotheses: “If X external thing happens, then what are our chances and opportunities”?  And as I just said, it rarely works like that. But even if we accepted that we can answer the question (in a business environment I think it is easier), it still presupposes that you already have an objective and you assess the impact of external factors for that objective. Doesn’t hat means that first you have the objective and then you do the SWOT? In that sense it is not really an instrument that helps you find your goal, but can rather be used as a strategic tool to design your next steps after you have defined a goal.
There is one more thing. It is not always very easy to say what is a Strength and what a Weakness in place, because it also depends very much on the “who” or “for whom” question. For example: at the moment, we are analysing an area of lignite mines in the German state of Brandenburg (s. blog entry here). Are the mines Strengths or Weaknesses? For the workers in the mines, they are the source of their daily bread and of that of their families, for others they are the destruction of nature – and I could give you a lot more. High unemployment is horrible for the unemployed and those around them, but some companies may be very happy to be able to choose at low wages when unemployment is high. So is unemployment a Strength or a Weakness? It depends on whether you are the unemployed or the business.
Of course I could analyse unemployment (or the mines) and see what it means in terms of SWOT, but then I am not really analysing the place, am I? Even if I were able to break down the place to the trillions of elements that make it up and SWOT each one of them, I would still not know how these things come together in place, will I?
These are open questions I have here, mostly from my own work and 20 years of professional experience. I’d be glad to hear your experiences and thoughts on the subject. I have a presentation tomorrow and the institution that commissioned us is expecting a SWOT analysis of the place…

13 February 2012

The Netherlands ranks one of the fittest country in Europe

Netherlands Ranks Fittest Country In Europe
The Netherlands ranks one of the fittest country in Europe, based on the EU’s six-pack scoreboard.
The Netherlands scored well on 8 out of 10 criteria, on the six-pack scoreboard, missing on just private sector debt and house prices.
UBS analyst Amit Kara said the Netherlands is another economy doing reasonably well, and it is benefiting from being a trade center. Their private sector debt is high, and though its government debt is above 60 percent, that is a stringent criteria, and given that it is one of Europe’s bigger economies, they have a pretty strong scorecard.
The EU announced a set of measures dubbed the ‘six-pack’, to help deal with the crisis and encourage economic and fiscal integration. The ‘six-pack‘ is made up of five regulations and one directive, with a focus on government debt and deficits.
UBS analyst Amit Kara says the six-pack is a step in the right direction, but the focus is on fiscal problems:
The fundamental worry is that the crisis we’re suffering from now is not going to be helped by these six pack measures. The focus is very largely on fiscal issues, excessive credit expansion and asset bubbles, but parts of the euro area face prolonged periods of stagnation, possible deflation and in some cases, such as Greece, there is risk of complete collapse – these measures are not designed to address that.”
Kara looked through the ’10 early warning indicators’ that the EU pointed out, to give us a sense of which countries are in the best shape. Remember, the European Commission has said it plans on taking full advantage of the six-pack rules and countries that consistently breach them risk facing sanctions and fines.
Source: UBS

Almost 100% of place branding

10 February 2012

Germany’s Hidden Weaknesses


Germany’s Hidden Weaknesses



WITH Greece once again nearing default, calls are going out this week for Germany to step in to help. And many Germans are, once again, responding with indignation, saying they shouldn’t have to bail out their profligate neighbors.
But there is another reason Germany should resist demands to intervene, one that Chancellor Angela Merkel can hardly express publicly. Though Germany is undeniably Europe’s strongest economy, its outlook is not nearly as rosy as people imagine. And while a bailout might seem to help in the short term, it would make it harder for Germany to lead in the place where it really matters: creating a fiscal union, a United States of Europe.
A quick checkup of Germany in early 2012 would give the country a clean bill of health: it grew at about 3.5 percent in 2010 and 2011, outperforming the rest of the Group of 8 countries, as well as the consensus forecasts. Moreover, despite the recession, the number of people unemployed, well above five million just a few years ago, has been cut by almost half.
Germany’s success story does not end there. German companies continued to increase their market share in world exports. With only about 1 percent of the world’s labor force, last year Germany produced about 10 percent of global exports. And the value of its exports of goods and services exceeds that of its imports by something like 150 billion euros, about 5 percent of Germany’s G.D.P.
It is this current account surplus that has convinced economists from Munich to Cambridge that Germany is benefiting at the expense of countries with a current account deficit, particularly its southern European partners. For moral as well as economic reasons, they argue, Germany now has an obligation to bring that distortion back into balance.
But this is a dangerously one-sided verdict. For one thing, Germany’s position is hardly permanent. Its labor force is growing older, and as we have seen in Japan, a country with a high savings rate and a current account surplus can quickly turn into a low-savings and current-account-deficit country as its population ages.
Moreover, the view that Germany must reduce its current account surplus ignores the interconnectedness of European economies. If a country like Germany is successful in exporting investment goods and cars to emerging markets, it pulls its neighbors along — if the German car industry is doing well, supplier industries in the Netherlands, Belgium and Slovakia do well, too.
This view also ignores the fact that a strong German export sector acts as a sponge for surplus labor in other countries — unemployed workers in Madrid or Athens can easily move to Munich or Cologne for work.
But the fact is that, even without a German-led bailout, the German economy is poised for a slowdown. Many economists expect growth to be well below 3 percent this year; my own guess is that it will come in around 1 percent.
Such expectations are hardly secret, and they reinforce the German public’s fear of aggressive action right now. After all, the international community appears unaware of the sobering experiences that Germany’s taxpayers have gone through in the last two decades. By the middle of this decade, the equivalent of up to 100 percent of Germany’s annual G.D.P. will have been spent to finance German reunification alone. This will have amounted to an annual contribution of 4 percent of G.D.P. for nearly a quarter century.
Most of it is being financed through a slowdown in government investment in western Germany and limits on social spending, higher taxes and social contributions. A third of that investment, however, has been shifted onto the shoulders of the next generation as debt. In fact, the country’s debt-to-G.D.P. ratio has risen from just below 60 percent to almost 80 percent, a bearable number in a strong economy but dangerously high should things slow down.
Is now a time to rejoice? Is Germany the star performer, the role model to be emulated? Or is the start of 2012 just a snapshot, showing a series of lucky coincidences that should not be misread as structural strengths? With some qualifications, I believe it is the latter.
With that in mind, Germany should not squander its recent gains through ill-advised macroeconomic policies. It should strive for sober policies, promoting sustainable reforms in Greece like privatization, an efficient tax collection system and modernization of the tourist industry.
Germany has learned the hard way that monetary union without some unification of fiscal policy making, and ultimately without political union, does not work. While today — on average — national parliaments control 50 percent of the European Union’s G.D.P. via the public sector, the budget of the union itself amounts to just 1 percent of G.D.P. To work, the European Parliament needs to command about a tenth of the national budgets, or about 5 percent of G.D.P.
Instead of looking to Germany for short-term bailouts, Europe should demand that Germany lead the way to a true fiscal union. It is a challenging task, but one that Chancellor Merkel and the German public are willing and able to meet.
Norbert Walter is chief economist emeritus for Deutsche Bank.

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